AI-Driven Denials Spike: Is Postacute Care at Risk?

The increasing use of artificial intelligence (AI) by insurers to deny postacute care claims is a growing concern for revenue cycle management (RCM) teams. With denial rates more than doubling in just two years, professionals in the field must adapt their strategies to mitigate the impact of these automated decisions on their operations and cash flow.

What's Actually Happening

Recent scrutiny from the Senate has highlighted a troubling trend in the insurance industry regarding postacute care denials. Between 2020 and 2022, the denial rate for postacute care claims surged from 10.9% to 22.7% at UnitedHealthcare. This dramatic increase coincides with Humana's efforts to automate its claims process, raising concerns about the efficacy and accountability of AI-driven algorithms in healthcare. The reliance on AI in deciding which claims to deny may not only be affecting patient care but also putting undue pressure on healthcare providers to navigate an increasingly complex appeals process.

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Why It Matters for Billing Teams

The rising denial rates directly impact billing teams and their workflows. As insurers increasingly deploy AI to streamline their operations, RCM professionals face a challenging environment where previously routine claims are now subjected to heightened scrutiny. This shift can lead to:

Increased Workload: With denial rates climbing, billing teams must spend more time on appeals and follow-ups, diverting resources from other critical tasks.

Cash Flow Disruptions: Delayed payments due to denials can strain the financial stability of healthcare providers, making it harder to meet operational costs.

Training Needs: Teams may require additional training to understand the nuances of AI-driven denials and develop effective strategies for appeals.

Compliance Risks: Navigating the complex landscape of denials may expose organizations to compliance issues if proper procedures are not followed.

What To Do About It

In light of the challenges posed by rising denial rates, RCM teams can take proactive steps to improve their processes and reduce the impact of these automated decisions:

Enhance Documentation Standards: Ensure that all claims are submitted with comprehensive and precise documentation to mitigate the chances of denial.

Invest in Training: Provide ongoing training for billing staff on the latest denial trends, particularly those driven by AI, to equip them with the knowledge needed for effective appeals.

Utilize Analytics: Leverage data analytics tools to identify patterns in denials and develop targeted strategies to address the specific reasons for rejections.

Strengthen Communication: Foster open lines of communication between billing teams and clinical staff to ensure accurate coding and documentation from the outset.

Engage in Advocacy: Participate in industry discussions and advocacy efforts aimed at addressing the challenges posed by AI in the claims process, pushing for transparency and fairness in automation practices.

The Bigger Picture

This trend of increasing reliance on AI in healthcare claims processing is part of a broader shift towards automation in the industry, as insurers seek efficiency and cost savings. However, as these technologies become more prevalent, the need for transparency and accountability becomes paramount. Healthcare providers must balance the benefits of automation with the risks posed to patient care and financial viability. As RCM teams navigate these changes, they must remain vigilant and proactive in their strategies, ensuring that patient care and organizational sustainability remain at the forefront of their efforts.

In an age where algorithms dictate financial outcomes, the stakes have never been higher for RCM teams to adapt and advocate for a fairer, more transparent claims process.

Published by RevCycleAI Research · March 17, 2026